Transcript Bell Ringer

Bell Ringer
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Pretend you are at a farmer’s
market. Two farmers are selling
strawberries. Farmer Fred is selling
the strawberries for $2.25 a basket.
Farmer Frank is selling the
strawberries for $2.00 a basket.
Which farmer would you expect to
sell the most?
Principles of Our Market
Economy
Chapter 14, Section 1
By the end of today’s lesson,
you should be able to:
Explain the circular flow of economic
activity.
 Explain the laws of supply and
demand.
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Free Enterprise
U.S. economy is based on the
principles of free enterprise.
 Free Enterprise is a Market System.
 In a Free Enterprise system,
individuals compete to have their
wants satisfied.
 Example: privately owned shops sell
consumer goods
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America’s
economy depends on the circular
flow of goods, services, labor & money
Circular Flow Model of a
Market Economy (page 378)
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Producers need resources to create the
goods.
Producers need:
1. Land
2. Labor
3. Capital
Producers are able to purchase these
resources when individuals pay for the
producers good or service.
Every Market Exchange Brings
Together 2 Sides
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To summarize, individuals exchange their
labor to earn money to buy goods and
services. The businesses/producers
depend on the money used to buy goods
and services to provide them the funds
needed to secure their needed resources
of land, labor, and capital. When their
workers (labor) are paid a wage, the
employees use their wage to purchase
goods and services. The cycle
continues!!!
Law of Demand
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Demand: amount of a product or service
that buyers are willing and able to buy at
different prices.
Law of Demand: Demand has an inverse
relationship with price.
When prices are low, demand will be
high.
When prices are high, demand will be
low.
Law of Demand
When prices are high, demand will
be ________________?
 Low
 Price and Demand have an inverse
or negative relationship.
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Law of Supply
Supply: the amount of a product
that producers are willing and able
to offer at different prices.
 Law of Supply: Supply has a positive
relationship with price.
 When price is low, supply is low.
 When price is high, supply is high.
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Law of Supply
When are producers willing to supply
more of a product?
 Why?
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Supply & Demand
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The laws of supply and demand work
together to determine the price of the
product and the quantity offered.
Market Price: price at which buyers and
sellers agree to trade.
Market Price is illustrated on a graph
where the supply and demand curves
intersect.
Analyze Graphs, Page 380
1. How will a decrease in price
affect the supply of
strawberries?
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The supply will decrease.
2. At $2.00 a basket, how many
baskets of strawberries could
be sold and why?
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600 baskets, because
suppliers will not be motivated
to sell many at such a low
price.
3. What is the market price
illustrated on this graph?
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$3.00
Comprehension Check
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What are some examples of free
enterprise.
Comprehension Check
What resources do producers need
to create goods and services in a
circular flow of economic activity?
 Labor, Land, Capital
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Comprehension Check
What can individuals supply to
businesses in a circular flow
economy?
 Money (payment for goods and
services) and Labor
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Comprehension Check
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If more shoes are produced to sell at $30
a pair than when they were sold at $20 a
pair, does this illustrate the law of supply
or demand?
Law of Supply
Would the demand be greater for the
shoes that are $20 a pair or the shoes
that are $30 a pair?
$20 a pair
Comprehension Check
When prices go up, demand usually
moves in what direction?
 Down
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Comprehension Check
What determines the market price?
 Laws of Supply and Demand
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Assignment
Analyze the diagram of the “Circular
Flow Model of a Market Economy”
and answer Questions A & B.
 This needs to be turned in before
you leave the class.
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